Deutsche Bank Claims NML ‘Harassment’ Over Argentine Bonds

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Deutsche Bank AG accused NML Capital and other Argentina bond holdouts of harassing banks that participate in legal debt offerings by the South American nation.

That harassment has included abusive demands for evidence, press leaks of confidential material and misstatements to a U.S. judge, Deutsche Bank said in a letter to U.S. District Judge Thomas Griesa in Manhattan Monday. The bank said it plans to ask him to throw out a subpoena by NML, a unit of Paul Singer’s Elliott Management, Aurelius Capital and other holders of defaulted Argentine debt.

“Plaintiffs’ true motivation is not discovery of relevant information but harassment of financial intermediaries,” Phillippe Zimmerman, a lawyer for the Frankfurt-based bank, said in the letter.

The hedge funds seek information from Deutsche Bank about $1.4 billion in Bonar 2024 bonds issued in April.

Griesa is overseeing disputes between Argentina and holders of bonds that the nation repudiated in 2001. He’s barred Argentina from paying on its restructured debt unless it also pays $1.7 billion owed to a group of defaulted bondholders led by NML and Aurelius. Griesa’s orders prevent Argentina from offering debt through bank operations in New York.

‘Fishing Expedition’

Zimmerman called the subpoena “the most recent voyage on a long-running fishing expedition” seeking broad categories of information to punish Deutsche Bank for doing transactions with Argentina. The bank’s Argentina branch made bids on Bonar 2024 bonds, on behalf of customers of its London branch, Zimmerman said.

The lawyer said an NML lawyer falsely told Griesa that Deutsche Bank and Banco Bilbao Vizcaya Argentaria SA units in New York had subscribed to $1.5 billion of the bonds. He also accused the hedge funds of leaking information that was ordered to be kept confidential.

Stephen Spruiell, an Elliott Management spokesman, declined to immediately comment on the letter. Aurelius spokesman Brian Schaffer didn’t immediately respond to voicemail and e-mail messages after regular business hours seeking comment on it.

NML and Aurelius have told Griesa their demands for evidence are to identify Argentine assets that can be attached to pay judgments against the country.

The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).

(Updates with bank’s allegation in third paragraph.)
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